VAT Dispute Resolution
Problems with HMRC
Disputes with HMRC are an increasing feature of our tax system. The incidence of dispute between taxpayer and HMRC is on the increase. The merger of HM Customs & Excise with HM Inland Revenue to create the existing HMRC has been a disaster. Staff that were experts in collecting excise duties and VAT now find themselves trying to administer and control direct taxes whilst ex Inland Revenue staff are trying to come to grips with VAT and other indirect taxes. Staff are demoralised with the result that 50 year old + experienced staff are leaving the department in droves to be replaced by totally inexperienced new staff who have no mentors to call upon in their training. This inevitably leads to delays in resolving areas of uncertainty and the imposition upon taxpayers of decisions and assessments that are questionable at best and downright wrong at worst.
In the VAT arena disputes arise on a regular basis over:
- The VAT liability of a supply;
- The amount of VAT that a business is entitled to recover as input tax;
- The place of supply of goods and/or services;
- Determining the nature of a supply; and
- The value of sales declared.
Ruffles & Co are expert at resolving disputes with HMRC. Our philosophy is that it is better to talk than to fight, but it is better to fight than to surrender.
Many disputes arise because HMRC do not understand how to classify a new product, (and often an existing product). They will take an initial stance of ‘if in doubt – tax it’. It is then for the taxpayer to convince them that a supply is subject to the reduced rate of VAT, the zero rate of VAT or that it is exempt from VAT or outside the scope of VAT.
By entering into properly structured negotiation and discussion it can be possible to get HMRC to adopt a different attitude and to concede issues in favour of the taxpayer. Issues have to be advanced correctly. Technical arguments are crucial. Supplies need to be analysed carefully, VAT legislation and precedent case law examined, where appropriate, so as to put carefully reasoned arguments forward.
Ruffles & Co will assume this responsibility for you. We will always involve you fully. Your input is crucial. You will review and comment upon all issues addressed to HMRC on your behalf. This is very important. You know your business better than we do. We know HMRC better than you probably do. In partnership we can usually resolve issues to the satisfaction of all parties.